University student debts and the cost-of-living crisis: What are the major parties offering to young Australians?

There is a broad consensus that the cost-of-living ‘crisis’ is the foremost issue on voters’ minds as we head toward the May 3 Federal election.

Declining housing affordability is one key area in which household budgets are being stretched, whether for renters, people looking to buy their first home, or mortgage holders facing still elevated interest rates.

Young Australians are one voter group on the front line of this crisis. They include the current cohort of school leavers who will be voting for the first time, and their Gen Y and Gen Z predecessors seeking to transition from the parental home to living independently or starting a family.

They have been hit by the double whammy of rising housing costs and rising education costs, manifest in growing student debts.

And yet, despite the upcoming poll being billed as a ‘cost of living’ election, policy pledges to date show little recognition that young Australians are one of the groups hardest hit.

This new BCEC Briefing Note analyses the significance of student debt as part of the cost-of-living crisis, the current Job-ready Graduates package and HECS-HELP debts, and the need for policy reform to support our younger generations and reduce intergenerational inequity in the years to come.

Key insights

• Total outstanding HELP debt reached $81 billion in 2023-24 across 2.9 million individuals, equating to an average student debt of $27,650.
• The Job Ready Graduates Package (JRG) forces many humanities students to contribute up to 93 per cent in course costs through the HELP system.
• For some STEM subjects, student contributions can be as low as 13 per cent of course fees.
• Labor’s commitment to a one-off 20 per cent cut in HELP debt translates to a reduction of around $6,000 for an average $30,000 of student debt but is distributionally unfair.
• For the 50,000 graduated students with HELP debts above $150,000, each will see $30,000+ wiped from their debts. But a second-year student with $20,000 in outstanding debt will benefit by $4,000 but will accrue a further $17,000 for their 2025 studies.
• Changes to HELP loan indexation offers a buffer against spikes in inflation but does little to address the growing burden of student debt.
• More substantive policy reforms are needed to address rising student debt, include a return to the fairness principles that underpinned the original HECS model.
• Discriminatory pricing under the Job Ready Graduates package should be scrapped and replaced with a flatter fee structure with students contributing at most 50 per cent of course costs.
• The income threshold for repayment of HELP debt should be close to average weekly earnings.